Fleeing U.S. Crypto Firms ‘Welcome,’ French Regulator Says

100-odd companies could be registered in France as the just-agreed MiCA EU crypto legislation beds in, Financial Markets Authority officials said

AccessTimeIconMay 17, 2023 at 7:21 a.m. UTC
Updated May 17, 2023 at 5:32 p.m. UTC
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PARIS, France – Crypto companies fleeing U.S. regulatory uncertainty have been offered a welcome in France, by officials boasting a regulatory framework that offers relative predictability.

The European Union member already boasts around 74 registered crypto companies – a number that could surge to 100 as a last round of firms seek to anticipate the EU’s Markets in Crypto Assets rules that were formally signed off by ministers earlier Tuesday.

“In France, we are proud to be pioneers” with the crypto service asset provider regime, known as PSAN, that was legislated in 2019, Benoît de Juvigny, Secretary General of the Autorité des marchés financiers (AMF), told reporters Tuesday.

“If American players want to benefit, in the very short term, from the French regime, and from the start of 2025 from European arrangements, clearly they are welcome,” he added. “We have good relations and discussions with our U.S. counterparts.”

The legal certainty now apparently achieved in France is only recently gained. In January, lawyers were warning that legislative amendments proposed by the national Senate – eventually watered down – could kill innovation.

There are also still some gray areas: French lawmakers are still pondering what kinds of crypto social media influencers should be able to promote. The EU is still deliberating on how to regulate financial services that have no central entity, and Juvigny said the AMF will produce a paper with some ideas in the coming weeks.

But essentially the legal framework is all but nailed down, contrasting sharply with the situation across the Atlantic. In recent weeks, players including Bittrex and Coinbase have quit the U.S., or threatened to, citing the uncertain regulatory environment caused by active regulatory enforcement, combined with no obvious prospect of a crypto law from Washington.

Not easy

France may be predictable and stable, but that’s not the same as being easy or straightforward.

Seventy-four companies, including Binance and Bitstamp, have already been awarded a registration demonstrating basic governance and money-laundering compliance. Firms can also take the further step of seeking a license, if they have enough capital, though no company has yet acquired one.

Under new transitional measures agreed earlier this year as a bridge to MiCA, companies applying as of July will undergo a “reinforced” registration, in which they have to prove they have resilient IT systems and a conflict of interest policy. MiCA itself, set to take effect in 2025, grants the right to serve the pan-European market, and extends wider to include services such as crypto investment, advice and portfolio management.

That web of four different coexisting regimes is complex, as de Juvigny himself concedes – but officials are keen to bat off complaints from the industry that some requirements are impossible to meet in practice, and procedures unduly lengthy.

Complaints

Contrary to some industry concerns, officials say it’s indeed possible for crypto firms to get commercially insured to AMF standards. “I’ve seen the contracts with my own eyes,” Stéphane Pontoizeau, a director at the AMF responsible for supervising market infrastructure and intermediaries, told reporters.

Those who do their homework by studying the AMF’s guidelines will find they can acquire a new status in just a few months, Pontoizeau said – adding that those who find it takes longer often didn’t get their house in order.

With dozens likely waiting in the wings to get registered, there could be around a hundred companies on the “start line” in France before MiCA kicks in, Pontoizeau said – though some, headquartered in other EU member states or serving only the French market, may not seek a full AMF license under the EU law.

And for some, France’s rigor may be the point – such as Circle, the stablecoin issuer which has applied for registration from the AMF, and said it also wants to seek a license.

Together with the ACPR, the arm of the French central bank responsible for vetting crypto companies’ money laundering compliance, “the AMF … have a strong reputation for being a major market regulator that is forward thinking but manages risk well,” Circle’s Vice President for Policy and Regulatory Strategy Teana Baker-Taylor told CoinDesk. “It's not a light touch jurisdiction.”

Quotations have been translated from French.

Edited by Nikhilesh De.

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Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.


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